Financial Accounting Standards Research Initiative

I have been in residence at the FASB for one week and I must admit that my head is spinning with all the opportunities to get involved. I want to do them all! It’s been quite a first week. The day after I arrived Bob Herz announced his retirement effective September 30th — I hope [...] Read more > >

How do we measure the quality of a panel discussion? If we measure it by the subsequent discussion it generates, the AAA panel on Financial Statement Presentation was definitely a success. Bob Lipe and I had a chance to talk with a number of people afterward, and I thought I would put in [...] Read more > >

If someone had asked me this question, my quick response would have been 19. (Well, it might have been something more nuanced like, “I think around 18 or so.”)  But a recent post by Tom Selling on the Accounting Onion points out how in many of the IFRIC’s decisions not to provide an interpretation (i.e., [...] Read more > >

Just got back from AAA meeting in San Francisco.  Great meeting.  One session consisted of a panel of preparers and users debating the costs and benefits of the joint IASB/FASB project on financial statement presentation.  In general it was very good. But I think the analysts were so focused on pushing for a direct method [...] Read more > >

On July 20, the FASB issued a new exposure draft of their proposed ASU concerning disclosures of litigation-related loss contingencies.  For anyone who may not have been following this issue over the past 2 years or so, the FASB first issued an exposure draft on June 5, 2008 which proposed enhanced disclosure regarding contingent losses stemming [...] Read more > >

I’ve just finished reading the IASB/FASB exposure draft on revenue recognition, and I have all kinds of questions running through my head. But before I get to those questions, let me first say that I am very impressed with this document. In fewer than 90 paragraphs of guidance (ignoring application guidance), the IASB/FASB have laid [...] Read more > >

A few weeks ago I posted a link to an interview with William Isaac where he calls some of the FASB board members “Religious Zealots.” Since then I’ve been pointed to a rebuttal article I enjoyed reading (these fair value arguments can be so much fun). To prove his point (and ours, unwittingly), he made this prodigious [...] Read more > >

The FASB and IASB released their exposure draft of their proposed revenue recognition standards. From paragraphs IN8 and IN9 of the official document In summary, the core principle [of revenue recognition] would require an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that [...] Read more > >

As most FASRI followers are aware, the IASB and FASB are revising their Conceptual Frameworks.  The new and old frameworks posit that relevance of information for making decisions is a key attribute for determining if a particular number should be included in financial reports. I recently attended a presentation of a research paper by [...] Read more > >

Were you shocked by the title of this post? It comes from a quote by William Isaac, former FDIC chairman. The quote was posted on a recent accountingWEB article that contains the results of an exclusive interview they had with Isaac regarding the FASB proposal to require loans to be carried at fair value. I don’t [...] Read more > >

**See bottom of post for a June 25 update.** After suffering through a 5-hour delay in Newark on Friday, it appears that I was not the only one about to be subjected to delay. Many of you have probably been wondering how the FASB and IASB were going to accomplish the monumental task of finishing all of [...] Read more > >

A recent CFO.com article talks about some pros and cons of the proposed leasing standard (FYI, the article says the exposure draft should come out in June). Having recently finished a couple of financial accounting courses, I’m excited to be done away with the 90% rule, the 75% rule, and the other two rules I [...] Read more > >

In case you haven’t already seen it elsewhere, the FASB website and Bob Herz’s testimony last Friday before the House Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises both contain Bob Herz’s earlier (April 19) letter to Congressman Barney Frank that discusses accounting standards and the Lehman Bankruptcy report.  Not surprisingly, I found it [...] Read more > >

Mary Barth and Wayne Landsman recently posted a paper that discusses how the financial crisis happened and what role financial accounting had in it. I really enjoyed their discussion of fair value accounting. I think it is a very clear explanation of why people blame fair value accounting and why fair value accounting actually isn’t [...] Read more > >

Thanks to everyone who participated in yesterday’s Round Table event. Hope to see you next week. If you’d like more information on this Round Table and Eddie’s research, click here to see the post introducing the topic. Read more > >

A recent Journal of Accountancy article states that the SEC Chief Accountant Jim Kroeker would support the FASB’s cutting the number of convergence projects due for completion in 2011. Here’s one excerpt from that article: “June 30, 2011, is an arbitrary deadline and it’s not one that’s been put in place by the SEC or by [...] Read more > >

Next Monday (April 12) is the first meeting of the Blue Ribbon Panel on Standard Setting for Private Companies.  This has the potential to be a very wide-ranging and interesting continuation of a very long-standing discussion about GAAP for non-public entities. As I understand it, many years ago, the debate began and was labeled the “big [...] Read more > >

On Wednesday, April 14th, 11 am ET, we will be joined by Eddie Riedl (Harvard University). Eddie will discuss on-going research relating to fair value accounting. This will include a paper co-authored with George Serafeim (also of Harvard University), entitled “Information Risk and Fair Values: An Examination of Equity Betas.” He will both [...] Read more > >

Thanks to everyone who participated in yesterday’s Round Table event. We look forward to your follow-up discussions and hope this proves useful for future research. Here’s the video of the event if you’d like to refer back to it. You can read more about the event here. Read more > >

Back in December 2009, FASB Chairman Bob Herz called for ‘decoupling’ GAAP and Banking regulations. Doing so could enhance the ability of both the FASB and the regulators to fulfill our critical mandates. We can continue to work with independence and an unwavering dedication to market transparency; at the same time the bank regulators can utilize [...] Read more > >

I think everyone would agree there are many reasons to enter a lease. However, I think we would all also agree that if the only reason to enter a lease was to obtain a certain accounting treatment then the accounting should be changed. Bill Bosco raised some very interest points related to the leasing industry [...] Read more > >

Thanks to everyone who participated in yesterday’s Round Table event. We had a great discussion about leasing. You can watch the video above. To skip the splash screen, scroll forward to 13:25. There is a brief problem with the sound until minute 14, but things are fine after that. I think a big take-away from the [...] Read more > >

If you assumed that accounting standards wouldn't get sucked into the highly charged health care debate, you guessed wrong! From the New York Times An association representing 300 large corporations urged President Obama and Congress on Monday to repeal a provision of the health care overhaul that prompted AT&T, Caterpillar and other companies to announce substantial [...] Read more > >

The great thing about people who represent an industry being affected by an accounting standard is that they are highly motivated to provide content.  Bill Bosco sent me a number of files for this week’s Roundtable.  The ELFA comment letter on leasing discusses both lessor and lessee accounting, and objects strongly to the notion that [...] Read more > >

Bill Bosco, who will be our speaker at today’s Roundtable, sent along the text of his comment letter on leasing to the IASB.  Here it is, in its entirety: Sir David Tweedie                                                                              July 12, 2009 Chairman IASB Dear Sir: I support the theory that operating lease obligations arising from material operating leases should be capitalized.  The issue of capitalizing operating [...] Read more > >

The FASRI Roundtable this week (11am ET, Weds Mar 31, 2010) will be lead by Bill Bosco, a member of the IASB/FASB International Working Group on leas accounting, Principal of Leasing101, and long time member of the Accounting committee of the Equipment Leasing and Finance Association (ELFA), a trade association representing the $650 billion dollar [...] Read more > >

In class yesterday, I stumbled upon an interesting apparent inconsistency between accounting for pensions and the accounting for compensated employee absences, which I had taught several weeks ago. When teaching my students about accruing for vacation pay, I observed that it seemed that if we knew for certain that employees were likely to get a raise [...] Read more > >

I just read an article (p. 22) about the CPA examination changes effective Jan. 1, 2011. The AICPA official release can be found here. There are several major changes taking place at the same time. I list three below: 1. Switch from two case-based simulations to six or seven task-based simulations. 2. Testing of the organization and use [...] Read more > >

About a year ago (March 12, 2009) the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Entities held a hearing titled “Mark-to-Market Accounting: Practices and Implications.”  The Committee members directed several hours of fairly hostile questioning to FASB Chairman Bob Herz and SEC Chief Accountant Jim Kroeker.  If you have not seen [...] Read more > >

Mark Evans of Indiana University will lead our next roundtable discussion, Wednesday March 3rd, 11am ET).  Here is the abstract from his recent paper, written with Leslie Hodder and Pat Hopkins, exploring fair value in commercial banks: For a sample of commercial banks during 1994–2008, we find that accumulated fair value adjustments for investment securities are [...] Read more > >